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Envirogreen Limited is currently preparing its financial statements for the year ended 30 June 2021. It is 27 July 2021 and the following events arise

  1. Envirogreen Limited is currently preparing its financial statements for the year ended 30 June 2021. It is 27 July 2021 and the following events arise after the end of the reporting period:

    1. Envirogreen announces that it is ceasing production of one of its major product lines.
    2. Botanica Limited, a major customer of Envirogreen, declares bankruptcy. Envirogreen recognised a trade receivable from Botanica of $850,000 as at 30 June 2021.
    3. A batch of inventory on hand at 30 June 2021 is spoiled when a warehouse floods on 5 July 2021.
    4. A miscalculation of the warranty provision at 30 June 2021 is discovered, which would increase its amount by 20%.

    For the year ended 30 June 2021, which of the items are adjusting events?

    A.

    Items (ii) and (iv).

    B.

    Items (ii) and (iii).

    C.

    Items (i) and (iii).

    D.

    Items (i) and (iv).

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